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The Steam sale has rolled around again, emptying wallets up and down the land as gamers find themselves curiously compelled to fill their libraries with games which they ordinarily wouldn't grace with a second glance. This year, the sale's allure has been boosted even further by the arrival of Steam trading cards, a finely honed slice of consumer psychology which encourages players to expand their libraries even further in order to build their card collection.

Much of the industry buys into the Steam sale lock, stock and barrel, as is clear from the broad participation of so many of the industry's top publishers and developers. However, every time the Steam sale (or any other mass-discounting spree) occurs, there are always a fairly significant number of vocal detractors - people who who worry out loud that this kind of sale event is damaging consumer perception of the value of games, making it harder for the industry to sell full-priced product and generally hurting game development and publishing right in the pocket. Steam sales are compared to the kind of aggressive and arguably damaging discounting of games by physical retailers, the implication being that Steam's detractors expected or hoped that the advent of digital selling would end such discounting practices.

It's important, I think, to understand why that's a short-sighted view - especially since digital distribution on consoles has, thus far, been extremely resistant to this kind of discounting activity. One of the things which was commonly pointed out by opponents of Xbox One's now deprecated DRM plans was that console platform holders and their publishing partners have proven themselves to be decidedly inflexible and consumer-unfriendly in their pricing of digital games. Even when console digital stores carry out sales, they rarely manage to discount their games below the level of equivalent physical products on Amazon or in retail stores. One common refrain is to blame physical retail for this problem ("if we discount too heavily, retail will throw their toys out of the pram!" is the regular excuse), but there's a distinct undercurrent of belief that game prices have been driven down too heavily by discounting, and digital sales reflect the "true value" of games.

"Even when console digital stores carry out sales, they rarely manage to discount their games below the level of equivalent physical products on Amazon or in retail stores"

This view is wrong, and not just because it's an attempt to remove videogames from the reality of market-led pricing and, as such, is on very shaky economic ground (and let's not even go into the irony of the avowed capitalists who run most games companies being so uncomfortable with price determination being influenced by market economics). A far bigger problem is that it's a view that's focused extremely narrowly on looking at individual games in isolation, and completely fails to appreciate the extraordinary value of sales and discounted products in the context of the entire ecosystem of videogames.

Step back for a moment and think about the movie business. People in the games business love thinking about the movie business, dreaming about the bright lights of Hollywood and the mountains of cash it commands. One truly enduring topic for videogames' captains of industry is bemoaning the notion that the movie industry gets more "bites of the cherry" than videogames do. Films are released in cinemas first, then launched on Blu-Ray and DVD, eventually turning up on premium TV channels and finally being broadcast on terrestrial or free-to-air channels. At each point, the film has a new price point, a new distribution method and potentially, a new audience - hence the commercial success of movies like The Shawshank Redemption, which was a cinematic flop but a massive hit on DVD. Games, by comparison, seem to receive only one bite of the cherry - you either sell huge numbers in your first week, or you flop utterly (unless you're Nintendo, in which case you've got an enviably elongated sales curve that adds up to huge numbers only after a long time at retail).

That argument is completely reasonable and certainly true, but it's also extremely narrow. It focuses only on the lifespan of one product - one movie or one game - to the exclusion of what's actually a much more important perspective, one which includes the entire ecosystem of which a single movie or game is only a single small part. Viewed in this regard, the "multiple bites of the cherry" which films enjoy are actually far less valuable from a financial perspective than they are from the perspective of audience development and consumer engagement. By the time a movie has been on DVD for a few months or turns up on broadcast TV, the financial side is barely relevant in the overall scheme of things - but what's hugely, vitally important is the long-term value of exposing a vast audience to the movie and its creators, thus (hopefully) growing the potential market of people who'll engage with subsequent movies in the financially valuable early stages of their lifespans.

In simple terms, what this means is that you want as many people as possible to watch your movie on TV, borrow the DVD or pick it up for a couple of quid from a bargain bin, not because you'll make money this time, but because if they like it, they'll be part of your high-paying audience next time. At the most basic level it's easy to see how this applies to franchise movies - if I saw the X-Men movie on TV and loved it, I'll probably buy a cinema ticket to see X-Men First Class - but it also applies more broadly to movies from the same director or starring the same actors, which is why the film business puts so much effort into promoting those names as brands in their own right. They allow franchise effects to span films that aren't part of a franchise; "From the Director of...", "From the Creators of..." or "From the team that brought you...", along with the faces of recognisable stars on posters, are where much of Hollywood's true value is held.

"You buy a book for a dollar in a second-hand sale, or borrow it from a friend. You love it, so you seek out more books in the same series or by the same author"

The same notion applies to other media, of course. You buy a book for a dollar in a second-hand sale, or borrow it from a friend. You love it, so you seek out more books in the same series or by the same author, picking them up cheaply in paperback or on Kindle. Next time a book in that franchise or written by that author appears, there's a decent chance you'll pick it up in hardback on the first day, completing your transition from non-paying customer to high-paying fan. I think every hardback on my shelves is the final step in a journey that began with a book borrowed from a friend or picked up for next to nothing in a second-hand store - this is how the book business has worked for many decades, which explains why the book business is rather more comfortable with lending, borrowing and extensive second-hand selling than the games business is. ("But books degrade! Games are physical so they don't!" - oh, really? Tell you what, I'll read a dog-eared 100 year old book while you play a scratched 1 year old game disc, and we'll see which of us gets on better.)

For games, the opportunity of the Steam sales or other major discounting efforts (PlayStation Plus springs to mind) is similar. It's not about making more revenue from this product, although the little boost in earnings late in the product cycle is no harm. Rather, it's about getting your franchise or your name out in front of people who would otherwise never have engaged with your game - so that next time you release a game in the same series, or (if you've marketed yourself as a creator, which the games business has traditionally been awful at doing) from the same creative people, you'll be able to reap the rewards. I pick up Bioshock for next to nothing from a sale or a bargain bin, and next thing you know I've got a pre-order for a full price copy of Bioshock Infinite - that's the value of the sale and the discount, not the bump in revenue for Bioshock itself.

The new generation of indie creators includes a lot of people who seem to understand this connection very clearly - perhaps because the indie motivation is often more deeply related to connecting with a broad audience than to maximising financial gain anyway. Mike Bithell, creator of the excellent Thomas Was Alone, recently enthused about the game's success on PlayStation Plus, noting that more people played the game for free on Plus than on any other platform. Rather than being concerned about value perceptions, Bithell is excited that this has given him exposure to a huge audience of gamers, making "From the creator of Thomas Was Alone" into a vastly more valuable and powerful statement for his next game. That value, in the long term, is probably worth more than any financial settlement involved in putting the game on PS Plus - and the same logic should apply to any creator putting their work in a Steam sale or otherwise discounting it.

"The new generation of indie creators includes a lot of people who seem to understand this connection very clearly"

This is the logical flaw at the heart of the notion that games should hold their value better than they presently do. If you want to sell games at a premium price point - and I don't have any problem with certain types of game being somewhat expensive, since there's clearly a market for them at those price points - you need to have an entry point somewhere. Nobody walks into a store and spends $50 on something out of nowhere - there's a process involved in becoming a high-spending consumer, and for games, bargain bins, Steam sales and, yes, second-hand sales and lending, are an important part of that process. Do they devalue games? No, not really. Some consumers will say "oh, I'll wait for it to drop in price" - but those aren't your core fans and were never going to spend full-price anyway, at least not this time. If they really love your game, perhaps next time they'll be right there with the full-price pre-order. Understanding and utilising that fact requires a more long-term view and a willingness to avoid trying to wring every drop of revenue out of each individual game in favour of cultivating a bigger audience over the long term. Games haven't always been good at that, but when I look at the Steam sale, that's what I see - long-term value being created, not destroyed.

I definitely agree that having more flexible long-term pricing is the key to ensuring games have a healthier shelf life (even if the shelf is digital). I think the problem with Steam is that it introduces a binge element to the process. The savings are so ridiculous - up to 90% off in some cases - that I can't help feeling it must encourage people to hold off on making a purchase until the price is as low as it can possibly get. Anecdotally, I've heard and seen variations on "This looks cool, I'll probably pick it up in the Steam sale" more times than seem healthy.

There's also the speed with which prices fall these days (admittedly, this also impacts other media like DVD as well). Almost every full price game can be had for less than half RRP within a few months of release. Less than six months later, many are down to £10 or £15. For the big AAA blockbuster titles, that shrinks the retail window in which the title can be truly profitable. As always, the answer is to find ways to make games more efficiently, but it still sticks anything other than the super high profile "must have" release day behemoths with the "wait and see" mentality.

And, as Teut points out, a great number of these games may be purchased and downloaded, but then sit uninstalled and unplayed on hard drives. From a commercial point of view, who cares? But if we're making games in the hope of entertaining people, this binge mentality is unhelpful.

So, yes, sales are a good way to extend the life of a product, but I do feel games tend to bleed their value too far and too fast.

"digital distribution on consoles has, thus far, been extremely resistant to this kind of discounting activity"

Actually there are some really good sales on PSN. Right now they've got a big 60% off sale on Naughty Dog titles, which means you can get Uncharted for £6, Uncharted 2 for £8, Uncharted 3 for £16 and Golden Abyss for £7, with another 10% off everything for PS Plus subscribers. They're also discounting the new Tomb Raider to £17 for one week only, apparently. And there's a big sale on old PS1 and PS2 games, most of which are a couple of quid each.

@Dan but when people buy a lot more games due to lower prices and according to Teut actually play each title less you get much broader exposure to the experiences created and more chances to convince players for your product. It's not cool if your game isn't even installed but then again it also gets picked up by so many more who will try it just because it went on sale.

I don't believe that the way it works now (rare, massive sales) will create a "binge mentality". Customers with enough purchasing power can still pick games up at RRP throughout the year, only the ones who really have to care about their spending will wait and those weren't going to buy it at 50$+ anyways. These aren't huge investments. If anything the digital model beats out the retail model when it comes to long term sales even with price drops because there's no need to have clearance sales all the time and games stay available forever. With gaming becoming more and more connected picking games up at the same time as others (which is often at launch) becomes more rewarding as well. Arguing that people will wait for sales is just like arguing customers will wait until after the winter to buy a new coat.

Nobody walks into a store and spends $50 on something out of nowhere - there's a process involved in becoming a high-spending consumer

Pretty much what I said recently in another thread. If you want to expand the audience, you don't do it by making them have a huge outlay. My analogy was golf - going from the driving range to being a 3x a week country club member - not everyone will make it to the end point but some people will and others will stop somewhere in between and those people are still valuable to the industry in a financial sense (as well as others). The industry just has to cater to them and "catering to them" isn't saying "we provide B-movie quality games at £20 so these customers will make the jump to the £40 premium brands..." It doesn't work like that.

That's why the platinum range (I forget what the 360 and Wii versions are) is so important and why sales in retail shops (and online stores) are also important... and therefore why sales in online digital stores are also important. We haven't even gotten onto lending yet!

Edited 1 times. Last edit by James Prendergast on 19th July 2013 11:21am

Dan - "There's also the speed with which prices fall these days (admittedly, this also impacts other media like DVD as well). Almost every full price game can be had for less than half RRP within a few months of release. Less than six months later, many are down to £10 or £15"

I suspect most of those games should have launched at a lower RRP in the first place, or they would have held their price for longer. Retailers wouldn't discount them that heavily if they were still selling big numbers at full price six months on. Not every game is a Call of Duty or FIFA that people know they'll play all year and get their £40's worth from. I suspect a lot of smaller titles would probably make more money selling at a lower price from day one, and maybe have lots of cheap DLC (new weapons, vehicles, characters, skins, levels, whatever) to maintain a longer revenue tail.

Also, as other people have said, whatever price somebody buys the game at, if they enjoy it they're more likely to buy more games from that series / franchise / developer / publisher in future, probably earlier in its life cycle and at a higher price point.

"Some consumers will say "oh, I'll wait for it to drop in price" - but those aren't your core fans and were never going to spend full-price anyway"

That's the same argument people make for piracy.

There's a lot of truth in your article but unfortunately it's a bit of a simplification. Simply put games aren't movies. People go to the cinema (where the lion share is made) to watch it on the big screen on a night out with friends or partners. DVD or On-Demand is watched whenever you want. TV is whenever it's on plus it's very lucrative for the TV channels. All offering different experiences.

Games on the other hand offer the same experience no-matter when you buy them.

Plus I would be a bit careful in following movies as an example as the only films that are getting green-lit are big summer blockbusters because of the experience they offer in the cinema. A lot of drama has moved to TV where they can make money from advertising. Blockbusters and Free to watch, sounds familiar?

Personally I've always thought games should look at following the TV network model rather than F2P or Heavy discounting sales but I suppose things like Humble Indie Bundle is almost the same thing. It's funny how market forces sort these things out eventually.

A good example of some of the points of this article was done recently during the last months of THQ. They had Metro: Last Light coming out in a few months, and with Metro: 2033 sales having dropped off, they literally just started giving Steam keys for it away for free. It was pretty obvious what they were doing but it did strike me as a smart move. They removed pretty much all barriers to entry to the franchise at that point in time in anticipation of a much bigger payback when Last Light was finally released. A pity they didn't start being that forward thinking earlier so they could actually reap the rewards.

Stage (1): $10 per person per times you watch it
Stage (2): $6 per digital rental, one time watch as many viewers as you room can fit
Stage (3): $30 permanent ownership, watch as often as you want with as many people
Stage (4): --Licensing Fee-- Movie now part of some monthly subscription you have
Stage (5): $10 deep discount of $30 retail version
Stage (6): --Licensing Fee-- Movie now on some free TV station, they make money back by selling ads.

Games:

Stage (1): Does not exist. Feasibility? Publisher desirablitiy questionable
Stage (2): Does not exist, see above
Stage (3): $60 game
Stage (4): --Licensing Fee-- Free game for a month on PSN. Stage exists, but very limited compared to movie stage 4
Stage (5): Deep Discounts; market utterly conceeded to second hand. This stage drives 50% of gamestop revenue with little money for developers and no competitive pricing attempts from their marketing departments.
Stage (6): --Licensing Fee-- Ad supported versions of games do not exist at this stage. Game might end up on some game magazine cover, which is as limited and unpractical as movies trying the same thing.

John - Games on the other hand offer the same experience no-matter when you buy them.

There's no denying that the experience of going to the cinema differs significantly from watching something on your telly, but once you're crossed over to your living room, the experience of popping in a disc, downloading an on-demand rental, streaming the film, or watching it on a free-to-air channel is very similar. To bring it back to cherry biting, only the first bite feels like a bad comparison. The others (Rob listed another three, but there are more) feel quite apt.

Movie pricing is broadly linked to how long you wait from initial release to consumption. Consuming a film on day one, where the hype machine is in full swing and interest within your social circles is at its peak, means you have to pay full price. Watching the same film years later on ITV3 as a repeat won't cost you much more than a few minutes of your time watching adverts, but hardly any of your friends will give a damn and your own excitement level is probably pretty low at that point, too. In between, however, there are many ways of consuming the same content at gradually decreasing price points (disc, on-demand, pay TV, streaming etc.), with social awareness equally decreasing.

What's happening to game sales is pretty much the same. During the first few months of sales, when the game is advertised and thus has become a cultural presence, it costs the most. But turning up in a Steam sale is not dissimilar to a film turning up on Sky's on demand service, or for a game to be included in the PlayStation Plus selection is not dissimilar to a film being made available on Netflix. Deciding to wait for a price drop will get you the same experience, but you will have to consume outside its window of immediate cultural relevance.

Ultimately it's that relevance of the moment that content providers sell and that people pay the premium for, before the experience itself disappears in the white noise of choice. So Rob's argument of utilising an expired experience to contribute to the relevance of a brand new one, makes absolute sense to me. Steam sales are not devaluing video games, they accelerate the cultural relevance of the medium as a whole.

I think there are a couple points opponents are missing. First is that people are actually buying the games. In my youth I made some questionable decisions and have pirated games, but now the prices of sales items on Steam make it almost more trouble than it's worth to pirate titles. Over the past few years I have legitimately purchased almost every game I have ever pirated through Steam and I am not alone in that regard. I have heard many first person accounts of people doing just that.

Secondly, it's almost the same argument that you hear in piracy. The fact of the matter is sales like Steam's Winter and Summer Sale get people to buy games they would never have purchased otherwise. People crave value, even if it's only the appearance of value. That's why the used game sales are such a large market.

The bottom line is that yes, deep discounts like Steam's Sales do keep some early buyers at bay, but it more than makes up for it with the sheer number of people it attracts that have no interest in purchasing the game in question. This leads to a more adventurous consumer that is willing to take risks and try something new. That is exactly why indie developers are so keen on it, because they literally are that "something new" in most cases.

It has been proven that people who pay a lot for a product spend more time with it, while paying far less for the identical one does reduce the time immensely.

I can see the logic in this - but you indicate its 'proven' any chance of posting links to the proof (sorry this sort of thing fascinates me).

I agree with the theory - but in practice from what I've seen this is dependant upon the value of the product in comparison to other similar items on that medium (ie. whether the user perceives something as cheap) and the users income level.

As such the €5 Tomb Raider game you indicate might be a throw away purchase for a millionaire but for a teenager it might be a substantial investment etc.

"Tell you what, I'll read a dog-eared 100 year old book while you play a scratched 1 year old game disc, and we'll see which of us gets on better."

Brilliant. And true.

Carl's also got an excellent point about the problem being "people who don't buy your games". I wouldn't even tie that to piracy, though. The greater problem is the great mass of people who might theoretically buy and enjoy your game at a lower price point, but don't do so because that lower price point doesn't exist, or because they simply don't know it exists. That's a problem of discoverability and price flexibility. The former is still a unsolved problem, especially with digital...but Steam shows that the latter issue is a solved problem, using the same technique that people have used in retail for over a century: price reduction over time, and periodic sales to capture bargain hunters and impulse buyers.

As for that "first week window"...I seem to recall that Psychonauts made more money on Steam than it ever did before, despite its Steam release happening years and years after its launch. Humble Bundles routinely take games with middling launches and send them into the stratosphere. F2P games like DOTA or LOL famously bulid up over time. If that one-week rule did exist for digital, it's not an argument to be deployed, it's a solvable problem.

Edit: By the way, Klaus' breakdown was interesting, but missed a few things.

Movie Category #1 (public play, paying per view/watch) USED to exist. They were called arcades. You may remember them. It'd be almost impossible to bring that model back due to download time for home consoles, but it did exist. A modern equivalent might be possible using OnLive-style streaming.

Movie Category #2 (rental) USED to exist, and DOES exist. People rented games as a matter of course in the past, and the fall of Blockbuster aside, people do it to this day. There is absolutely no reason why you couldn't do digital game rentals. Paying to download a AAA-level game for temporary play might be daunting for people like myself with download caps, but those with more generous plans would probably consider it.

It'd be trivial to give them an option to convert the "rental" to permanent ownership.

You could capture the audience who are only willing to pay a small amount to try it out, you could successfully convert a portion of the renters into owners, you build up your brand identity, and you know that people will play your game because unlike the discount-buyers, the renters are on a deadline, so that's that objection dealt with.

"Also someone released a stat that over 30% of products during sales are never even installed."

In my case, it goes to the backlog. I've finished about 30 games last year and still have a lot more to go through. For all those suffering the same fate, my recommendation is pick smaller or more linear games and try your hardest to leave the ones you know to play for 100+ hours for last, or the pile just keeps stacking.

15$ for three books, paperback. Books are certainly more expensive when first released as well (hardcover) and then get discounted although not as steep. They also start out at a lower price point in general (absolute size of investment matters to customers, not only relative to benefit). You'll be hard pressed to find many AAA games regularly available under 10$ in digital markets though which in terms of discount is comparable to a 3$ paperback version of a hardcover. Really not a stretch if you think about the variable cost per unit for digital being zero.

I've yet to buy a damn thing this Steam sale. Why? I have TOO many games from other sales on my hard drives I haven't touched. I've actually gone and installed/played most of them, but the bad ones in those bundles get uninstalled/deleted in a hurry (i still "own" them as part of an increasingly embarrassing library (little in joke there as I love my "bad" games almost as much as I love the great ones), but at this point, it's just stupid to open my wallet and buy more stuff I won't get to until 2014 or 2015.

The sole exception are the Spiderweb Software titles I snapped up. I'd only played demos and one full game of Jeff's to date, so I couldn't pass up the chance to grab his entire body of work and veg out when I can...

One side effect of these sales among the folks who aren't smart is they expect EVERY game to go on sale at some point and faster outside the usual window we see on some AAA titles. They're trained by these summer and other all year sales through Steam and other download sites to hold out for a price drop, shop around to see if it can be had elsewhere and then hold out some more for that game to drop in price again until it's too much of a deal to pass up.

Nothing wrong here, except it kills the idea of the "evergreen" game Nintendo loves to hold on to - that title that can be sold for full retail or close to it just because it has a loyal legion of fans willing to pay full retail way past a shelf life.

The other silly thing is Best Buy's recent (and REALLY stupid) error in selling Metro: Last Light on their site for a penny in a listing that was SUPPOSED to be part of a new graphics card offer. When you have people buying upwards of 50 (and in one case 85) copies of a single game for NO other reason than it's a penny (many of the people I saw posting in one forum couldn't even PLAY the game on their PC's!)... yeah, there's a problem.

OK, I did offer someone a whole dime for a code because the issue was fixed a few hours later, but I never got a response back.

There is value even in the 90% of sales, not everyone can afford games at current premium prices, by creating such cut prices you open up the games market to a greater number of gamers, ones who can afford a product at £5 but not £50, sure you have to sell a whole lot more copies to make the kinda profit you did at 50 but after a certain point in a products lifecycle no one is willing to pay 50 for it anyhow the only way to re-attract interest in the product is to dip the prices, I buy only a handful of games at full prices, those I do are usually franchise's or by people whose games I've purchased previously and yes some of the prior products I only bought due to steam sales, which made me willing to pay full wack to get the next version early, every now and then I pick an unknown and take a gamble on it full price.

But the vast majority of games I buy are through sales, thats not to say i spend most of my time playing these games, but I do get to try out lots of games I wouldn't otherwise play as the price for that kind of product is not something im willing to pay off hand, overall every sale adds not detracts from the kitty and a 90% sale ends up with allot of copies sold, so it balances out, as well as providing the opportunity the article above describes it also opens up new audiences to your games, and gives it a 2nd chance at an audience, alas I have checked psn sales, never seen one I've been very tempted to buy yet, all to expensive, a minor discount to a product I wouldn't be willing to pay full price for because I dont trust the experience is worth that price is little incentive, if I wont buy it at £50 i wont buy it at £45 or £40 and frankly id be pretty unlikely to get it at £25-30 either, better i save the money for a full price purchase of something I do trust, only by heavily discounting it to the £5-15 category am I willing to take the risk, its also worth noting since I swapped to steam and steam sales appeared I have spent quite a bit more yearly on games then I had previously via amazon, due to all the extra games I've been able to encounter and discover I like, practically forcing me to follow their next releases for full price or at least the puny pre-order discount, where otherwise I would have played neither the latest release nor the preceding title, so yes I spend more yearly due to sales, then i would otherwise, and give more companies my money in the process, and I'm certainly not the only one.

One thing that hasn't been touched upon here is Steam's Gift system. The heavy discounts can act as a profit-producing form of word-of-mouth, with people buying games that they think their friends will enjoy. After all, what's a better idea - saying to someone they really really need to try Dark Souls, or paying £5 for it during a 75% discount phase and gifting it to them? And it doesn't even need to be gifted to a friend - SteamGifts goes crazy during any Steam Event sale, with games gifted to random people.

Edited 2 times. Last edit by Morville O'Driscoll on 20th July 2013 11:40am

Its a balance between value and impulse buying. I think that's down to the consumer to make that choice though, I'm all for big sale reductions as games are to pricey. Gives an opportunity to pick up a number of new products and experiences, plus it is a great way to pick up dead sales.

I think you're stretching reality to try to squeeze some positive outcome from Steam sales, but the harsh truth is that it boils down to more and more folks waiting for the Steam sale instead of buying games at their full release price. Not good for developers, which means it's also not good for consumers in the long run. Sorry.

but the harsh truth is that it boils down to more and more folks waiting for the Steam sale instead of buying games at their full release price.

That assumes people would buy those games at their full-release price. Which is definitely debatable. As an example, I bought a deep-discounted Steam key of NBA 2K13 from a Brazilian store for the equivalent of £5. Given the stupidly-harsh copy-protection, certain features being removed from the PC version, and the fact that I don't care that much about basketball games, I would not pay even twice that amount for the game, let-alone full-price.

Edited 3 times. Last edit by Morville O'Driscoll on 20th July 2013 11:24pm

There is this crazy assumption that people are happy to pay 20 to 40 quid for a game, but they're really not. Half the price and you get more than twice the sales. That says all there is to say really.

Edit: @Ruben, it doesn't matter if it's bad for developers. As per my comment above, I don't think it is. But if developer X can't live without selling tons of units at a large price, it's for them to change, not the consumer. We are in the business of selling luxuries to consumers here, and it's for us to figure how best to do that.

@Morville
It's all psychological, isn't it? £5 seems cheap because you still have a mindset that a game costs 40. Steam sales are eroding that mindset.

@Paul,

There is this crazy assumption that people are happy to pay 20 to 40 quid for a game, but they're really not.

Well of course, because they know it's going to be available for 5 to 10, so 40 feels like a rip off now.
About half price = 2x+ sales, are you sure it's that straightforward? Because I'm not. And half of what? Today is 20 to 40, tomorrow is going to be 10 to 20. Isn't it all really just racing to the bottom?

It's all psychological, isn't it? £5 seems cheap because you still have a mindset that a game costs 40. Steam sales are eroding that mindset.

I see your point, but here's the thing - I placed a financial value on NBA2K13 that disregarded it's full retail value. I honestly do not have a clue how much it costs at full retail, I just know that I, personally, would not pay more than £5 for it. That is how much I value the game at. Now, that last sentence is no doubt going to be hurtful to developers, but it's the truth. In addition, I do not have the mind-set that a game costs £40, because I haven't paid that much for a game in absolute years. I shop around, to the point that I have paid half the standard-retail-price for some games on or before day-of-release.

As an aside, how do people here feel about Amazon? Kane & Lynch 2 (as a random example) is currently £4.25 on Amazon (PC, new), vs £2.71 on Steam's Summer Sale. After the sale ends, Amazon is going to be undercutting Steam by almost half.

Edited 4 times. Last edit by Morville O'Driscoll on 21st July 2013 3:51pm

It's got nothing to do with price but rather the time and percentage drop. If a game drops 20% after 6 months it probably won't effect full price sales however if it's 90% after 1 month it most certainly will.

If Phil Fish is seeing this behavior the sales are probably too much too fast and are leading to a race to the bottom.

I don't have a problem with that though. Starting price points have been rather prohibitive for many, adjusting them isn't the end of the world. It decreases the part used sales play and allows more people to afford new games, making them more of a social experience because more people play them at the same time. I've always felt out of the loop back in the day when I had to wait a year to be able to afford a game friends of mine were playing and talking about since day one, this feeling certainly hasn't decreased in a connected gaming world. Had games been priced at 20$ new (which might very well decrease the demand for instant sales), I would have gotten in on many more of these trends, nowadays I might even be driven to get the same DLC others get. Obviously the current budgets would have to be adjusted but it's astounding how much can be done on low budgets as the indie market clearly shows.

I think that one major difference between games and other media is the sheer amount of content. If a game has 5 or even 10 hours of play, a hardcore gamer will consider it short. A gamer will expect 20 to 50 hours, including re-playability (higher difficulty levels, New Game +, side quests, ...). Even hundreds of hours can be expected from a good game, due to multiplayer or mods.

When you get such amounts of content for a very low amount of money, one of two things will happen: you will either play a small percent of it (or none at all), in which case you it will not spur you to buy more from these creators, or you will play a lot of it, in which case there's a good chance you will buy future games, but you'd have spent a very long time on this game, which means you have played fewer other games.

There's no other medium in which you can pay $1 and get 50 hours of entertainment. With $1 bundles it's pretty easy with PC games. Even $5 for 50 hours that isn't something you'll get elsewhere. The problem with current prices is that they lead to people owning huge game libraries which they don't play, and which they buy not based on what they previously played but on what's on sale and how much they think it will appeal to them. It works for now, but I'm afraid it's not sustainable in the long term.

There's no other medium in which you can pay $1 and get 50 hours of entertainment

Price is not a question of the medium, but the distribution methods and its business model:

Free Radio Stations
Free TV Stations
Podcasts
Public Libraries

The only thing unsustainable in the Steam environment is cookie cutter gameplay with incrementally improved visuals. The PC has shown this to be true over and over. Even if you try to profit off WoW by being some MMO, or profit off Minecraft by being CubeWolrd. In the end, you will make less than the game with originally popularized something new.

I tihnk Sales on Steam are fine as they are, enticing in new cutomers to a brand they may have been curious about, and now think the financial risk is worth taking.
I myself didn't like BioShock, but on seeing Bioshock Infinite for half price decided the risk of me not liking it was acceptable and i took the plunge.
Sales are also one of the few effective communicators in a games store.
Books have chat shows talking about them, there is the Oprah Winfrey Book Club, The Richard and Judy recommended Book List. Big names attached to products in store to entice people into buying something they wouldn't have considered.
Films again have something similar, reviews from Names Everyone Knows. The big newspapers like the Times, The Guardian, the Daily Mail all allowing review highlights onto something. Again enticing in a wider audience: My mother didn't consider seeing Django unchained until The Guardian gave it top marks.
Games doesn't have this kind of Names Everyone Knows ecosystem around it, gamers know about games, but someone passing a gaming store with no prior intrest is not going to be enticed in by regular displays, the sale one might. But bookstaores have "Richard and Judys Summer reading".
Why can't games start doing this?
There are "celebrity gamers" out there, Comics Dara O'Brien, Charlie Brooker. Younger actors too must surely be playing games. Why not get them involved? Have a big poster: NAMEs Summer games?
Someone not intreested in games may see this and think "ooh, NAME likes this, i like him/her on the telly, maybe its worth a go if "NAME" enjoys it."
It is all well and good to complain about sales, and profit, and getting new people involved, but until we explore more ways of doing this, it won't happen. Game should be courting the popular media, not carving its own niche deeper.

@Klaus Preisinger, perhaps I put too much stress on the price. It's an issue, but the bigger issue is the size of the content. A single title is big, and you have to dedicate time to it. Music is something you often consume in the background, and even if you get it for free you would find time to consume it, and you'll consume dozens of titles without much effort, which could lead to sales for these bands. Books can take time to read, but you can read them anywhere, and you can read them in small chunks, often even without a lot of focus. Games require you to sit by a machine, concentrate on them, do it for an extended period of time, and if you put them aside for a while you lose some of your skill and memory of the content, and you usually don't have the equivalent of going back a few pages to remind yourself.

Books and movies can also suffer from backlogs, but couple the time needed for games compared to other media with the current low prices, and you get a medium which sells for collection more than for consumption. I think that's a problem.

Edit: I also think it's worth noting that in your examples from other media you don't own what you listen to or read. While ownership for digital games is an interesting issue (but out of scope for this discussion), you're still buying the games, and even for free games, you still get to own them. You have full control of when and for how long you'll play them. That's not true for libraries or radio, and it's what makes gaming so conductive to hoarding.

I agree. I think what is being said at the text is very accurate. I myself have bought a lot of ganes based on that train of thought. I think is something about tue consumer. I, for instance am the guy who plays something from a friend first then if I really like it I'll get it for me. Games are extremely personal in a way that if I pay a big price in a game just because it carries a brand like Metal Gear and the game sucks I'll feel like I lost my money and I usually don't buy other games from the franchise.

A lot of publishers use branding to promote second hand games like if they were first hand and sell for the same price.

On the case of used games sale I just bought a game on steam that got me the idea of re-playing two of its prequels. I wouldn't buy that on a store. The idea that 30% of games no being installed when u buy in sales may be true but it doesn't change the fact that the game was bought and that the guy who bought it did it because he loves the game